@Imperious:
In fact, their top execs were giving themselves pay raises while this was all going on. Management made up 17% of the company which seems kind of high since that means there’s 1 person in management for only 5 workers. Seems to me they could have shaved some fat by reducing their management numbers to save some money. But, they didn’t.
Not really true because the company busted, so they don’t get paid these raises ( unless they get paid a year in advance up front).
The pay raises(up to 80% increase) were given in 2011 when they already knew that the company was failing so… yes, it is true.
The mismanagement part enters the equation when drivers for $1.09 Ding Dongs gets 100k per year. Nobody should get wages like that in that kind of business.
Yeah, and a manager who makes 250k+ definitely earns his money for pushing paper and works harder than the driver, right? :roll:
Their mismanagement came from not cutting part of the management side in their quest for cost reduction and poor financial decisions with regard to how they used the money they borrowed and in the terrible loans they took from their lenders.
The article said that with all the money they were borrowing they never bothered to upgrade their ancient factories and delivery trucks(both obvious sources of inefficiency).
If they started w/o the union none of this would happen. Instead of $22 per hour for basic labor, the average could be $12-15 and 50% pension contribution. NOT FULL PENSIONS. The 8% is not getting deposited is basically $1.76 and that should have been accepted.
This is purely an assumption. And one that is very limited in it’s scope. Not every union worker was earning 100k/year. And not every driver was earning that much either. Only some of the drivers were earning that much and they were clearly the ones who had been working there the longest.
@Imperious:
The critical issue in the bankruptcy is legacy pensions. Hostess has roughly $2 billion in unfunded pension liabilities to its various unions’ workers "
The long term issue is that the business was not sustainable due largely to Union pensions. Probably the secondary issue is the smaller bakers union didn’t ratify the new contract, forcing the other 75% of the employees to suffer with those consequences.
You’re cherry picking your data. You single out their pension obligations and completely ignore the massive debt load they worked themselves into. Plus, since last August 2011, the company hasn’t paid a dime into the union pension funds and they are still going out of business so your claim that it’s the union pensions that are dragging them down is false. Again.
Need proof? Here you go:
“The loans had relatively high interest rates of 8% and 5% (reflecting Hostess’s above-average default risk after bankruptcy). Thus, at the end of the first bankruptcy, Hostess came away not only with concessions from both lenders and unions but with $490 million of fresh capital”
“Those fortuities aggravated Hostess’s two root problems – a highly leveraged capital structure that had little margin of safety, and high labor costs. Neither problem was adequately addressed in the first bankruptcy, and neither existed to the same degree in major competitors like Bimbo and Flowers Food.”
“But the company was dead wrong. Its debt sowed the very seeds of the next bankruptcy.”
“Finally, there are the woebegone Teamsters. They have plenty of skin as well – and feel as if they’ve been fleeced out of almost $100 million from Hostess after the company “temporarily” ceased making union pension contributions last August.”
They borrowed a ton of money at high interest rates during and after their 2004 bankruptcy and then spent it poorly, they are completely ignoring their pension obligations which you say is the cause of their problems, and their major competitors are operating with the same unions and similar contracts, yet they seem to be doing ok. None of the evidence supports your theory.
Plus, the unions had already once suffered massive cutbacks and job losses to save the company. How many more times would they need to sacrifice before you figured out that it was mismanagement that ruined this company and not the unions?
Management raises of the rates mentioned were not for 17% of the workforce, that was for only the top few people. The only reason why they are brought up is because they didn’t share in the wage reductions while asking the other workers to vote for lower wages. Not why Hostess went bust anyway.
I never said all of management got pay raises. I said top execs. 4 of them to be exact. And, yes, it was being mentioned because it illustrated the mismanagement of the company. Further mismanagement and injustice occurred when ALL 17% of management were allowed to keep their jobs, income, and pensions while the unions were the only ones who were required to make sacrifices. That was my point.
They ran the company into the ground, demanded that only the unions and not management make sacrifices, and then blamed the unions for the failure of the company. When a company prospers, it’s because of good management. When a company fails, it’s because of the unions. Typical. Wrong, but typical.
